Guidewire Software, Inc. (GWRE) Earnings Call Transcript & Summary

Hello, and welcome to Guidewire's 2021 Global Investor Day. I'm Alex Hughes, Vice President of Investor Relations for Guidewire Software. I think I speak for the whole team when I say we wish we could have done this presentation in-person this year, but we are thrilled that you could join us at least virtually and that we're able to do it shortly after our fiscal year-end and Q4 results where I think we demonstrated real momentum with the Guidewire Cloud platform. Today is going to be a chance to dive into that in a little more depth. And we've got a great lineup of speakers. Starting today will be Mike Rosenbaum, our Chief Executive Officer, who will give you a corporate overview and then talk about how we're powering P&C on the Guidewire Cloud platform. Next will be Priscilla Hung, our President, who will talk about what we're seeing from customers as they move to the cloud and how we're driving adoption. Then Christina Colby, our Chief Customer Officer, will talk a bit about the customer success program we've put in place and do a Q&A with a couple of customers that give you a chance to sort of hear from them directly and submit some of your own questions. So we're very excited that we were able to add that to this year's Analyst Day. We'll take a quick break. We'll come back, and then Diego Devalle, our Chief Product Development Officer, will, along with Roger Arnemann, our General Manager of Analytics, give you an update on how we're executing on the Guidewire Cloud platform. And then Jeff, our Chief Financial Officer, will finish on how we're executing into a cloud model. We'll finish the day with a Q&A session with all of the execs. That should last around 45 minutes. And the day should finish around 4 p.m. Pacific Time or 7 p.m. Eastern Time. So if you have any loved ones that are asking you when you're going to be able to leave the office and come out and play, that should give you an idea. Now before I hand it over to Mike, let me just say that this date -- this presentation does include forward-looking statements, and those are subject to risks and uncertainties, and I would invite you to read that at your own leisure. Thank you.

Hello, everybody. My name is Mike Rosenbaum. I'm the Chief Executive Officer here at Guidewire. And I, first of all, want to say thank you very much for joining us today and sharing some time with us, giving us an opportunity to talk to you about our company and how excited we are about the short- and long-term prospects for Guidewire. And I think in order to understand Guidewire, you really need to understand the property/casualty insurance market. For our 20-year history, we have chosen to focus very specifically on serving this 1 individual industry. And so in order to understand us, you really need to understand property/casualty insurance. It's a massive global market. It touches almost everything on Earth, and it provides a very unique role in providing protection from catastrophe-driven loss. So here's our picture of the market, right? This is almost over a $2 trillion a year industry spread across Americas, EMEA, Asia Pacific, and it's actually also a very concentrated industry. There's really only about 2,000 insurance companies in the world. It's very difficult to be an insurance company. And even within that, the market is very concentrated into the top 60 over $5 billion and over in the top 300 from $1 billion to $5 billion. And that's where Guidewire traditionally has provided a very significant amount of focus is on this Tier 1 and Tier 2 insurance market, which covers the vast majority of this $2 trillion, $2.5 trillion in direct written premium written every year. The other thing about property/casualty insurance is it plays this incredible role in our society and in our economy. If you think about almost every single person in the world touches, in some way, P&C insurance, whether through personal lines insurance that individuals and households have or commercial lines insurance that cover things that businesses need to operate. This isn't something that we think about every day, but it really is very fundamental to the effective function of our society and the effective function of our economy. And doing property/casualty insurance well helps facilitate all of these operations, all of these things work more effectively. The other thing that it does, which I think is very, very unique and very important, it provides protection against growing catastrophe risk and actually also growing cyber risk, right? And if you think about climate change having a bigger and bigger impact on catastrophes occurring, if you think about the growing concerns about cyber and cyber-related loss, the P&C industry actually has a very important role to play in connecting global wealth and finance to the risks associated with climate change and cyber. We think that there's a pretty significant disconnect between the amount of catastrophic loss every year and the amount of insurance that the industry is able to provide. But our expectation and I think the expectation of the industry is that innovation in the P&C industry that we're excited to be able to help foster can help close this divide and provide better coverage for these growing risks. So look, at Guidewire, we strive to execute a pretty simple mission every day. And that's to power insurance innovation by providing a cloud platform that the industry can trust to engage, innovate and grow more efficiently. This is what we do each and every day as we think about building a technology platform that the industry can use, that our customers can use to innovate and improve the state of P&C insurance. And we've been very, very lucky to have the opportunity to serve our customers for over 20 years. We've been very successful. We have over 450 insurance brands running on Guidewire right now and touch about 22% of property/casualty direct written premium in the world across America, across EMEA, across APAC. And we were just recently named the leader in the Gartner Magic Quadrant for P&C core platforms for the -- actually for the seventh consecutive year. But we're not resting. We're continuing to push. And I think in order to really have an appreciation for what we do, I wanted to spend a few minutes and talk to you about what we mean when we think about Guidewire as a platform for the P&C industry. And so a modern core platform for a P&C insurer starts with this core system of record. And that core system of record is fundamentally what Guidewire provides to our customers. We support the underwriting processes, policy administration, claims management and billing processes that every P&C insurance company in the world needs. And the vast majority of these systems are still, even to this day, running on legacy mainframe technologies. And they need to be modernized, and they need to be brought forward into modern systems that enable our customers, that enable P&C insurance companies to engage, innovate and grow efficiently with their customers. Now what's interesting to me about the P&C insurance technology challenge is that almost everything that they do that is interesting revolves around the core system, whether or not it is being able to digitally connect to their customers and to insurance agents with personalized products and omnichannel experiences. These digital interfaces, these digital solutions, they need to connect in real time to the core system of record. And everyone is talking about in really every industry in the world the impact of analytics upon business process and business decisions. While in the property/casualty insurance industry, those analytics initiatives are dependent upon access to the core system of record. Modern analytics solutions with machine learning and artificial intelligence, it is absolutely necessary that they're connected in real time to the underwriting and claims business processes that end users are using to make these decisions. Next is data, right? And the insurance industry has always leveraged significant amounts of data to better make decisions and better predict the future. But we think that accessing new and new universes of data that are collected in sort of mass on behalf of the entire industry can provide better insights and make -- and allow these companies to make better, more informed decisions connected right back again into those core systems of record. And finally, these systems need to be preconfigured for the specific lines of business and the specific regions and the specific regulatory requirements that every single P&C insurance company deals with. It's a very, very complicated and highly regulated industry. And so to the extent that these systems, these core systems can come with the prebaked content that enables them to get to market and grow more effectively, that makes growth initiatives more effective. That makes these transitions, these transformations to modern systems faster and easier. And again, it's all dependent on the configuration of that core system. So that was my high-level view of what Guidewire does, and here's a little bit more of the specifics around our cloud platform. We spent the last couple of years completely transforming what we do at Guidewire to turn InsuranceNow, InsuranceSuite and our analytics offerings into cloud-native, cloud-ready services that our customers can access really at any point in any region in the world. We're built based on a very strong partnership with Amazon Web Services to provide regional support, backup data recovery. But then we've invested a very significant amount into the Guidewire Cloud Platform that takes these core systems and makes them available to our customers, updates them in real time, delivers the claims and billing and policy solutions all with access to backwards-compatible integration services and APIs and a modern digital experience that facilitates their ability to connect those business processes to really anybody in the world. It's all supported by a marketplace of applications and an ecosystem of systems integrators that facilitates our ability to do this unlike any other company in the world. I'm not going to talk too much more about the technology. You're going to hear more in the presentation from our Head of Development, Diego Devalle; and our Head of our Analytics Business, Roger Arnemann, and they're going to go into a lot more detail about all of this. I want to talk now about the opportunity that, that technology platform presents us at Guidewire by expanding into more use cases and more customers. So Guidewire right now is about a $700 million a year -- if you consider our fully ramped value of the contracts that we have signed, we're about a $700 million a year ARR company. That's what you see in the bottom-left blue box, right? And when you think about just our current customers, expanding the DWP, or direct written premium, that we touch with our core systems and expanding into a full suite of products that we can sell just to our existing 450 customers, that turns into about a $3 billion ARR company. Then if you think about the new customers, adding new customers to our company's footprint, that adds an additional $10 million of total addressable market. And then when you think about adding analytics and data offerings that can complement that core system on top of that, you add about $8 billion. When you look at this, you say, okay, we're about a $700 million fully ramped ARR company. Do we have the potential to grow? I look at this slide, and I think absolutely, yes, we have a very significant opportunity to grow with our current product footprint. So I want to talk a little bit about cloud, cloud adoption and the potential that exists, dig a little bit deeper into the potential that exists just within our customer base. So if you look at these slides, we break it down for you by tiers, right? Tier 1, Tier 2, Tier 3, the size of the insurance company that we're focused on. If you look at Guidewire Cloud is the dark blue wedge in these pie charts, that gray wedge is the self-managed installed base that we've been able to build over our 20-year history. Now we expect to convert over time 100% of that gray wedge, of that gray segment into cloud. And that creates an up-sell opportunity because, on average, we tend to gain ARR at about 2 to 3x when we convert a self-managed customer to a cloud customer, and that creates a growth opportunity for us. But as you can see here across all 3 of these tiers, there is very significant opportunities for us, not just to expand our cloud offering to our existing customer base but to also use that same platform and expand to the untapped potential, the customers that have not yet modernized, the customers that are not yet leveraging Guidewire as a core system. This next slide basically gives you the same perspective, but it breaks it down by region. So as you can see very clearly, Guidewire Cloud has had its most success in the Americas. Not at all surprising. I think it was the first region to really adopt cloud, at least in the P&C insurance space. But we fully expect that those cloud wedges in EMEA, those cloud wedges in APAC will expand as we convert our self-managed customers in EMEA and APAC. We will gain traction in the cloud in those other regions. We'll take the traction we already have and continue to expand. But then you can see there's a very, very significant opportunity to modernize core systems to get a greater percentage of the DWP in the regions outside Americas. But again, I would say the fundamental takeaway of all of these slides is there's a very significant opportunity for us to continue to grow, continue to accelerate our ARR as we proceed to sort of steadily and, in a determined way, continue to modernize core systems and continue to move core systems to our cloud product offering. So we always get asked, and I wanted to cover it just very briefly, about competition. Guidewire is not the only company in the world that has recognized this opportunity, the value potential in modernizing core systems. We fiercely compete for every deal that we have. And these 2 charts -- our goal is to show where do we fit in that competitive decision-making process and what percentage of the competitive deals are we winning, either based just on decisions and counts or based on DWP. As I told you before, we pay particular attention to a focus on the Tier 1 and the Tier 2 segments of the market because that's where the vast majority of the direct written premium is written in the industry. And so that for us is very important to sort of maintain our lead, maintain our focus and continue to win our fair share of these decisions. So in the next section of this presentation, I want to talk to you about what I see as the sort of 4 key pillars that are necessary for us to execute on to take advantage of this opportunity. So number one, we need to just continue to grow cloud adoption and delivery; number two, we need to focus on a repeatable product innovation cycle that proves the value that we're able to deliver to our customers in the cloud; and next, we need to be able to embed innovative data and analytics solutions to not only differentiate our core offering but also to create the product footprint that's going to enable us to expand into that next layer of the market opportunity for Guidewire; and finally, to just continue to expand our partner ecosystem and marketplace. So I'm going to go into each one of these 3 things. So for the past 3 years, InsuranceSuite Cloud sales really have grown, right? And this, I think, is the best indicator of how well we're doing transforming Guidewire as a self-managed product into Guidewire as a cloud platform. You can see pretty great, great growth, basically, doubled from fiscal year '20 to fiscal '21. And when you layer on top of this the market presence and growth that we also have in our InsuranceNow-Suite, the combination of InsuranceNow and InsuranceSuite, we have almost 100 cloud customers now running the Guidewire Cloud Platform. And then you think about behind every single one of those sales, there's a really complicated implementation. There's a complicated upgrade. There's a complicated implementation. And then -- and eventually, there's a production go-live. And so the real true measure of our cloud success is how many production customers do we have running InsuranceSuite in the cloud. This is the major transformation that's been going on at Guidewire for the past 3 years. And when you look at this slide, you can clearly see that momentum happening in fiscal '21. Getting to 16 production InsuranceSuite Cloud customers is a phenomenal milestone for us. And the growth rate that you can see here is really a testament to the progress that we've made, convincing customers but also on the product side being able to support 16 production customers. Now based on how many we've sold last year, we expect this growth rate will just continue. And this chart will just keep on going up and to the right as we move all of our customers to production on our cloud. Okay. So now I want to talk to you a little bit about the product. And I'm not going to spend too much time on it because, like I said, we've got a whole section in the presentation on product. But probably, I think the most transformational thing that we've done at Guidewire is maybe not exactly just moving our solution to the cloud. It's actually instantiating a new cycle for product innovation and a new mechanism, a new philosophy about how we deliver that innovation to our customers, right? We shifted from a 2-year product release cycle to a 6-month product release cycle. And at this point, as we stand sort of on the cusp of releasing Dobson, our fourth cloud release, I am very confident that this new approach, this new mindset in our organization is completely instantiated, right? Our ability to, number one, release new versions of the product every 6 months; but number two, instantiating a philosophy about backwards compatibility and making those updates, making those changes, delivering them in such a way as the customers can just immediately take advantage of them, that's a very fundamental shift that we've been able to make here at the company. And it's -- and I think when we look back on it 5 or 10 years from now, this will end up being so critically important to how we operate and the value that we're able to deliver to our customers. So I hope you're looking forward to hearing from Diego later on in the presentation about some of the exciting things we're delivering in Dobson. Next, I want to talk to you about analytics, okay? So interesting statistic here is that we already have about 50% of the deals in our last fiscal year that attached at least one of our data or analytics products. Now that's a great number. It shows you that sort of about half of the deals that we're doing are at -- are -- where we're thinking about a complete package that includes core and includes analytics. I'm personally not going to be satisfied. And so we drive that number higher, but I think that the potential obviously exists. What's so interesting to me about this slide and also the industry is just how vast the opportunity is for us to add value to core systems through data and analytics offerings. Whether or not we're helping S&P quantify cyber risks and building out a financial model based on our science product offering or whether or not we're working on pricing accuracy or better segmentation or bettering -- improving buying experiences, at every single company that we work with, at every single insurance company, there is an opportunity to leverage data and analytics across some aspects of their business process and enhance the value that they are able to deliver to their customers and improve the efficiency around which they're able to operate. I'm incredibly excited about where we are in the journey and how, working together, cloud with data, with analytics, we're going to be able to do something, I think, very transformational for our industry. So let me talk a little bit about our ecosystem. And Guidewire's success is absolutely dependent on a very, very close partnership with some of the leading systems integrators in the world. We have 66 consulting partners, over 13,000 Guidewire-trained consultants. And the statistic that we're most proud of is 2,300 of those consultants are now certified on our cloud offering. That, to me -- the growth in that SI ecosystem and especially the growth in the cloud-certified consultants, that really indicates how everyone in our ecosystem, all of our stakeholders really see that this cloud transformation is happening and that will basically create the horsepower we need in order to be able to do these modernizations, do these cloud upgrades and really take advantage of the potential that exists within the Guidewire product suite. So the other side of the partner equation is our marketplace, okay? And the Guidewire marketplace truly accelerates innovation and lowers the cost associated with implementing all of these solutions. Now very often, a Guidewire core implementation will involve hundreds of different integration points. And by packaging those integrations, by packaging the connection between Guidewire and any one of these other services, we can basically make these sort of plug-and-play approaches to the implementation that significantly reduce the expense of the implementation and significantly enhance the innovation that our customers are going to be able to deliver and extract from their investment in Guidewire. I'm personally very excited about this because I think that as we move our customer base to the cloud, those cloud customers get a much more robust and modern API framework in order to be able to integrate to other solutions. And when you think about the billions and billions of dollars that are being invested into the insurtech landscape, all of those investments end up as potential partners for Guidewire. And to the extent that we can make those partnerships sort of plug-and-play integrations that you can download from the marketplace, this whole system is going to start to accelerate. And the value that each customer gets from the cloud is going to be significantly enhanced by the over 730 applications that are already on the marketplace. So this is one of those things that I keep watching, I hope you all keep watching. As we evolve, release after release, we just improve and improve and improve. And the sort of collection of applications that our customers have to choose from advances right along with our cloud adoption. Okay. Last slide from me before I turn it over to the rest of the team. I just wanted to focus you all in on this kind of one statistic, one number, one measure that I use to think about, are we making progress? And is the company headed in the right direction? Are we really doing everything across all the facets, all the functions at Guidewire? And what's that one singular measure of whether or not we're successful? And for me, that's cloud ARR. You can see here for the past 4 years, cloud ARR has grown at about 54% each year. And we just had a phenomenal year in 2021. And as we make this transformation as a company to being a cloud company and as the industry takes advantage of the potential that our cloud offering presents, this number will just continue to grow and grow and grow. And soon, maybe the real milestone for me is when cloud ARR is no longer really distinct from regular ARR at Guidewire. But I wanted to share this with you. We're very proud of this measure as the ultimate view of our success and our ability to execute across all these dimensions. Okay. And so that is the end of my presentation. And now I'd like to turn it over to Priscilla Hung, our President and Chief Operating Officer. And she's going to talk to you about the programs and the approach that we're taking to driving cloud adoption in our customer base. So thanks very much, and I'll see you in the Q&A.

Good morning. I'm Priscilla Hung, President and COO of Guidewire. As Mike showed earlier, Guidewire Cloud is the only cloud platform in the P&C insurance market that spans all tiers and geographies. It scales from the small Tier 4 and 5s to the biggest Tier 1s, catering to regional players, national and global insurers alike. Guidewire Cloud also supports the needs for both net new customers launching new line of business as well as installed base upgrade to the cloud. While the P&C global market is big at $2.5 trillion a year, only 22% of the global DWP today is touched by a Guidewire core system. The remaining 78% not using Guidewire today, 50% of those are still using mainframes, which is constrained by inflexible older technology that poses challenges for carriers to respond to the rapidly changing market dynamics and also present obstacles for them to access innovations. While we have made tremendous progress so far in market adoption of Guidewire Cloud with more than 50 InsuranceSuite Cloud and more than 40 InsuranceNow customers today, we're still early in the journey of cloud transition, with roughly 15% of InsuranceSuite installed base adopted InsuranceSuite Cloud. There are clearly tons of growth opportunities ahead for Guidewire. With expensive coverage, we're the only cloud solution in the market uniquely positioned to capture the lion's share of the available market in both installed base as well as legacy core transformation to the cloud. The value proposition of Guidewire is significantly improved by Guidewire Cloud. Guidewire Cloud transfers the risks and responsibilities of core application management from the customer to Guidewire in a utility-like model. It operates on a purpose-built, secure and scalable platform without carriers in-house operational overhead or capital expenses, which allows carriers to focus on business agility and strategy that matters most to the business. It accelerates speed to market, may it be launching a new product or expansions into new geography or market segment. Guidewire Cloud is responsible for the underlying infrastructure and fast cadence updates, eliminating the need for carrier to execute resource-intensive upgrades. Guidewire Cloud Platform also offer API framework with prebuild integrations, allow fast access to innovation and lower cost of ownership. Carriers can take advantage of the flexibility of the cloud platform and pick the best path that fit their needs, risk appetite and speed. Guidewire Cloud allows carriers to start small and grow big as in the case of greenfield and test-and-learn initiatives or adopt a phased approach to migrate the existing big book of business from self-managed to the cloud. Carriers take advantage of the elasticity of the cloud to rapidly spin a prototype as in test-and-learn innovation lab projects or launch a greenfield line of business, making available new products to the market as fast as 3 months. It allows carriers to get familiarized with operating under core modality, identify organization gaps, change management, et cetera, as well as gaining experience before taking the existing large book of business to the cloud if they prefer. That said, we also have customers who are ready to move the existing book of business directly to the cloud immediately, has the desire to take advantage of the benefit of Guidewire Cloud without delay. We have the P&C insurance industry's largest partner ecosystem. Based on our experience, integrations typically account for up to 60% of the total project cost. Solution partners accelerate value creation, lower cost of ownership and implementation via prebuild integrations available for download in the marketplace today. We have 130 solution partners, a 43% increase in membership compared to over a year ago. Our customers' access to open flexible plugs-in allow them to access the wide range of innovation prewired to Guidewire Cloud, which significantly reduce the complexity and cost of integration. On the system integration front, we also have the industry's largest SI ecosystem with over 2,300 cloud-certified consultants, a more than 260% increase from a year ago. And over 13,000 consultants is in various Guidewire practice worldwide, more than 25% growth from a year ago as well. In addition to working alongside our customers and Guidewire professional services to execute cloud upgrade and implementation projects, our SI partners act as valuable strategic adviser to help our joint customers define a broader cloud migration and enterprise data center strategy. They also provide expertise on organization change management, advisory, project audit work and how Guidewire fits into that larger context as well. While our target market is vast, it is inherently risk-adverse, thoughtful and conservative. Customers' successful adoption of Guidewire Cloud serves as a critical proof points for others in wait-and-see mode to gain confidence to follow suit. It works like a well-oiled flywheel, one that we have already seen spin faster and faster. Successful Guidewire Cloud go-lives in the last year have led to more market increased interest as well as customer adoption of Guidewire Cloud, both in new and installed base. Our job every day is to ensure every single customer project is successful. More successful cloud projects yield more proof points, which will then give us more credentials and, in turn, yield more customer adoption, ultimately driving more DWP through Guidewire Cloud. Adopting the cloud is a consequential decision for our customers. We've always leaned into customer success as our mantra since the founding of the company. Our approach with Guidewire customer success is very simple. Not only we actively manage each cloud project closely alongside with our customer and our partner, we provide daily attention and care that differentiate us between a technology vendor versus a strategic partner to our customers. We work in concert with our customers to develop what success look like to them and carefully and methodically ensure we align our technology road map and capabilities with their business aspirations and provide support our customers need to achieve their ultimate goals. With that said, Christina Colby, our Chief Customer Officer, will provide more details about our customer success program and our approach. Thank you very much.

Thanks, Priscilla. Hi, folks, my name is Christina Colby. I'm Guidewire's Chief Customer Officer, and I'm thrilled today to be sharing a little bit more about our customer success program as well as to introduce you to a couple of our customers. So first, give me a moment and I will share a little bit about some of the things that we do within our customer success program. In particular, we've been very careful to be able to ensure that we're making the most of our customers' investments in Guidewire Cloud. And to do that, we've defined our path to success. Our path to success is oriented not only to help our customers to ensure that they are defining a plan that will help them to get the most out of their Guidewire investments from a technology standpoint, but of course, in terms of the business outcomes that they want to achieve. But additionally, our path to success is very focused on getting them live in production and then really taking advantage of the road map that we offer, both allowing them to use the technology advancements and enhancements that are included but also to really figure out how to unlock an additional level of business value. So not only is this something that we champion within our customer success organization, but it's something that we've been able to orient our entire organization around these key milestones for our customers. We do this really in a few different areas. And this is where the cloud model goes beyond just the technology and really incorporates and takes advantage of the fact that we can work in a different type of operating model in true partnership with our customers. So there's a few different areas here that are highlighted that we think offer significant incremental value to our customers. In particular, we ensure that we have an executive sponsor assigned to each of our customers, so that they have the right level of influence and leadership -- excuse me, influence and connection into our leadership team. We also assigned a customer success manager who works in concert with our customers day in and day out, not only helping to define what they need to succeed in the program but also to be able to capture a joint success plan that really looks at what the objectives are over multiple years, both from a technology and from a business standpoint, and ultimately helps to decipher what the road map means and brings that into our joint multiyear success plan. We also offer a significant amount of technical expertise, so that if 1 of our customers was to choose to do a Guidewire Cloud program themselves, if they want to use Guidewire delivery services, if they choose to use 1 of our many systems integration partners or some combination therein, they have an opportunity to have a very strong amount of technical guidance to help them to make the most out of our cloud solutions. And finally, we give them the right degree of guidance and focus that not only are they successful in their initial implementation, maybe in a couple of subsequent releases as they roll out their capabilities across their own organization and to their respective customers, but also to really ensure that they're making the most of the road map. I've mentioned that, and that's something that is really a strong emphasis and an area of focus for us. But I can continue to tell you about this. I think it really means so much more when you hear it from our customers. So I'm happy to be able to introduce 2 of our customers who are joining us here today. I'm thrilled that we have Raj Utraja as well as Greg Pfluger joining us. Raj is the Head of Omni Product Engineering from Gore Mutual. And in fact, after -- unfortunately, one of our other panelists was -- fell ill this morning. Raj has actually stepped in today. So we are extremely grateful for his flexibility to be able to join us. And we have Greg Pfluger as well who is the Head of Enterprise Systems Transformation at American Family, who's been a very long-standing customer of ours. One of the things that I would welcome the audience to do, there is a QA as well as a chat panel down at the bottom, I'll keep an eye on those as we go through the course of conversation. We have a couple of prepared questions, but we would love to be able to answer your questions live. So if you have any questions, please feel free, submit them throughout. Just as a matter of expediency, at least in this portion, we won't be promoting you to a panelist, although, of course, we will be doing that later this afternoon when you want to speak to the Guidewire leadership. But for this portion, please feel free, raise your questions. I'll keep an eye on those, and I'll ask them to Raj and to Greg on your behalf. So without further ado, I am very excited to be able to have these 2 folks with me today. Thank you so much for joining. It's great to see you both. How are you?

Thank you, Christina. Great to see you all, too.

Right. I'm doing well given the strange time we're in with everything virtual. I happen to be calling from an Airbnb in Northern Wisconsin because my son goes to a boarding school for the arts, and it's family weekend.

Excellent. Well, it's a great connection with both of you, which I love. And Greg, I see a splash of art in your background, which, I guess, lends into all the creativity you'll see this weekend.

Yes.

Excellent. Well, thank you so much, both, for joining. I really appreciate it. So why don't we get started in the conversation? And just for the audience's awareness, you'll hear through the questions that we go through. This hopefully is a really ideal balance between customers that you'll be able to hear from. We have Gore Mutual who is a newer customer of Guidewire. They have an opportunity to experience our systems for the first time directly being a cloud customer, which is great. And then, as a complement to that, as I mentioned, American Family has been a long-standing customer of ours. Greg has also -- has Guidewire experience even prior to his time at AmFam. And so we're able to really look at how Guidewire Cloud is now continuing the long-standing and terrific partnership that we have with American Family. So we're grateful to have both of those perspectives here today. And also, they are both production customers, which is great. Gore is actually rolled out across their agents, which I'm sure you'll hear Raj talk about. And Greg will talk about the fact that they are just now starting their business rollout. So some very exciting time. So gentlemen, why don't we actually jump in and get started? Raj, if you don't mind, could you share for everyone a little bit about Gore Mutual and your role with the organization?

Thank you, Christina. Gore Mutual is a 180-year-old P&C insurance carrier in Canada. We operate from Ontario and from Cambridge, which is around 100 kilometers off of Toronto. And this project, Guidewire transformation project, is one of the largest transformation project undertaken by the organization in past 180 years. In fact, Gore Mutual is the first insurance carrier in Canada that has successfully implemented PolicyCenter, BillingCenter and ClaimCenter on Guidewire Cloud Classic platform, and we went live in production in July. The business objectives that were set by our business partners have been met, and the platform has been functioning very smoothly.

That's great. Thank you so much for sharing that. Obviously, I'm familiar with it but really appreciate you sharing it with the audience. Greg, would you mind telling everyone a little bit about AmFam as well?

Sure. I guess American Family is practically a start-up compared to Gore because we're only about 90 years old, not 180 years old. But I joined American Family about 12 years ago and was specifically hired to lead a transformation effort shortly after American Family signed their first contract with Guidewire. I had previously been Guidewire, I believe, the second policy customer and the first billing customer when I was the CIO at Century Insurance. And the American Family that I joined was pretty sleepy regional carrier, about $7 billion in size. And shortly after that, we got a new CEO who had some more ambitious plans for growth. So we've done a number of acquisitions through the year, and we're about double in size from the company I joined. So we're about a $14 billion carrier now. Almost all P&C, but we do a little bit of life as well. And for P&C, we both do personal lines and commercial, but mostly personal lines.

Great. Thank you so much. I really appreciate it. So one of the things I'm sure the audience is quite interested to hear about is really sort of what made you select Guidewire Cloud. So Raj, maybe if you don't mind, I'll start with you. I know the selection process as you were looking at all of the possible solutions you could go to, that happened actually before you joined the organization. So if you wouldn't mind maybe just recounting a little bit about sort of what drove the selection process, maybe other companies that you looked at as well, just to give a sense of what that entailed.

Thank you, Christina. Yes. So when I joined, I reviewed this election process that had happened to choose Guidewire, and this -- there were multiple selection criteria around flexibility of the platform, how it aligns with the product business strategy that we wanted to achieve. Speed to market was a criteria. And given that how the entire ecosystem is growing and it's getting direct to consumers along with the broker ecosystem, we wanted scalability and flexibility on the platform side. Guidewire Cloud Classic was available at that time, so the organization had went ahead with Guidewire Cloud Classic platform. And we have plans to move to Guidewire Cloud native in future.

Which is right. The program is moving at such a speed. As much as we wanted to get you on GWCP in the course of it, it was moving at lightning speed, which I know we will come back to that in just a moment. Greg, as you mentioned, American Family had made the selection of Guidewire a while ago. We've been working in that platform -- obviously, we've been working together for quite a while. Could you talk a little bit about actually sort of your selection process and looking at Guidewire Cloud specifically?

Yes. So we started looking at Guidewire Cloud a few years ago. And we first started looking for it for the one operating company on the traditional American Family brand that was already using Guidewire Software across the suite. So altogether, we had about 1/4 of our premium on Policy and BillingCenter and about half of our premium equivalent managed by ClaimCenter. And 2 other operating companies also had selected ClaimCenter through the year. So we had a variety of Guidewire experience. But across the enterprise, we have a half a dozen other mostly Tier 2 package solutions. And then we also entertained our next-generation software being something we would build ourselves or we partner with a start-up with and things like that. And with Guidewire, it was really about ensuring that Guidewire could really have the cloud commitment that we had because, ultimately, the transformation we were doing is to consolidate redundant platforms we had across all those operating companies and redundant insurance companies in order to better share innovation and to drive a lot of costs out of the organization. And we definitely wanted a cloud platform to do that. As an example of sharing innovation, real easy example of that is usage-based insurance for the auto market. We have one of our operating companies that is on the fourth generation of UBI product. And then we have at least 4 other operating companies that sell some type of auto insurance that doesn't have UBI. We'll rather invest in UBI 4 different times. We would rather be on a common insurance product and common platform. So we invest in it once for our various distribution channels. And that type of consolidation was really at the heart of our decision both to move to a common platform and specifically to prefer a cloud-based solution. And we made that decision a couple of years ago and committed to Guidewire as being that platform.

That's fantastic. Thank you so much. I love thinking about it as sort of as the technology is a catalyst for the business change that you're describing about because, of course, the exciting work that you're doing across all the operating entities is definitely a significant undertaking. Greg...

Yes. If it hadn't been for that business driver, like honestly, we would probably still be moving to cloud but at a much slower pace because it would have been more as part of a technology upgrade cycle, which makes all the sense in the world, but you might do that every 5 years when you got to replace the hardware or something. And so we really prefer to have things have a clear business driver like that, that we're actually moving the business forward and sharing innovation and sharing products across the enterprise.

Which is great. So Greg, maybe building on that a little bit, could you elaborate about some of the specific components of the business case that really resonated for your business partners?

Yes. It's always a challenge of what you say when you talk like hard, measurable savings and benefits versus more speculative. So we have a pretty decent business case just on the IT savings that you get by consolidating platforms and legacy retirement. Actually, recently, my job has changed specifically to focus on that to make sure we actually get those benefits because there's plenty of companies that implement a new system and never retire the old. So those benefits were hard benefits that gave a business case but not a great business case by itself. And then on top of that, we looked at our cost to develop insurance products and where we have redundant costs. So across the enterprise, we have over 700 different programs. So a combination of product and state combinations that we have today. So we want to be able to significantly reduce that. And then we looked at operational cost savings outside of IT. So we're -- maybe older systems don't give the flexibility than a newer system would be. So there's more manual processes and things like that and where we can reduce those. And those are all different types of hard cost savings. And then more speculative is what we expect to get in new business class, lift or improve customer retention by giving better customer experiences, giving better product offerings like usage-based insurance or, on the home side, connecting with more IoT solutions. We have some homeowner innovations where we do faster homeowner quoting that we want to share across operating companies, things like that. And so those benefits are about new business lift or about better retention and a little bit harder to quantify, but it's really those that drive what we're doing more than anything else.

That's fantastic. Thank you so much. You actually touched upon quite a bit of this as you were talking, but I do want to just ask you. There was a question that was raised by one of the audience members, [ Jay Warner ]. And he asks, "When you think about your move to the cloud, how much of the selection process depended on, one, fearing the end of life for the on-premise Guidewire solution for a self-managed solution; or two, how much better the software was in the cloud via real-time updates versus the kinds of things that you would have to do waiting for on-premise updates that could take a while to install, test and implement?" So how much of that was, I guess, really kind of forward-looking about what the cloud enabled?

Well, it certainly was a combination. So I wouldn't say we had any fear about supporting the on-prem version that Guidewire has made a real commitment that I'm sure it would be supported for 10 years or more. We also have a long experience running Guidewire Software now. So we can do it pretty cost effectively, and we knew we could run it in the cloud. We had done our own proof of concepts of what it would take us to host it in the cloud. So there wasn't a fear factor of not -- of being supported and needing to move to cloud, but there are a whole lot of things that we have to do, but we don't really like to do that what we've added to ourselves, we have to do. So I prefer to focus on the applications and the value offering we could have. Like running infrastructure and doing upgrades and stuff is something we have to do but is no direct value and, honestly, is not so exciting. And in particular, long upgrade products means a period where I have to tell my internal customer that they can't have new enhancements for a while. We have to schedule some out-of-cycle costs in order to do those, things like that. So if I don't have to do that and I can just pay a Guidewire or another cloud vendor in a different part of our application stack, that's a huge benefit to have predictable costs, regular upgrade cycles and not have to be planning for those for multiple use. So it's really a combination of those things. We also find -- with mature cloud implementations, there are other ancillary benefits of just faster environment, provisioning, increasing scale and capacity quickly when we need it on dynamic provisioning, things like that.

That's outstanding. Thank you so much. Really appreciate that perspective. And it's also good to hear because those are some of the fundamentals, of course, that we underpin what we want to offer, allowing you to shift your focus towards those things that will enable more business value. So it's great to hear that that's being realized. Thank you so much for sharing. Raj, would you mind sharing a little bit about -- yes, I was just going to ask, can you tell us a little bit about maybe some of the components of your business case as well?

Yes. Exactly. So I mean, what Greg just mentioned, we actually experienced is the flexibility of having the cloud platform available, our ability to spin up a digital platform because we wanted to deliver the transformation project on an aggressive time line. So it really helped us on the agility side to get new platforms up and running and have multiple ports working in parallel, so that we could deliver on those business values faster. And having the technology expertise closer to what business is trying to achieve gives us more buck for the bang. Whereas on the other side, if you have technical ability just for outperforming upgrades and all, it doesn't drive to that value. So that is now offloaded to the Guidewire team on the cloud management side, whereas our team focus is on delivering the business value from the project front.

That's terrific. And so Raj, building on one of the things that you said there, you were talking about kind of that pace, right, and how quickly value can be unlocked. Could you tell us a little bit about the time line of your implementation? It was -- it definitely had pace, which was excellent.

Yes. I mean it is actually a record-breaking implementation. We implemented all 3 modules within 1 year of the very first sprint to the go-live date. There was work done prior to the sprint 1, which was preparing the groundwork, understanding what areas we want to implement, what partners we want to bring in. But once the implementation started the day 1 of the project development cycle, we were in production within 1 year.

That's terrific. And one of the other things that I'd love to touch on actually with both of you is really understanding if you found an impact from the pandemic. And Raj, I know I had a conversation with you and some of the other folks on your leadership team at Gore Mutual pretty early on in the pandemic, really encouraging us, keep moving and keep moving fast. Could you maybe talk a little bit about that?

Exactly. So when the pandemic came, there were 2 type of organizations. Some organization took it slow, whereas Gore Mutual on the other side accelerated on the enhancement of the new transformation project. So it worked out in our favor because there was resourcing available. We were able to ramp up, and the operating model also worked out because we were able to hire resources across Canada and other geographies as well. And the project was put on fast pace. Along with the support that was provided by our implementation partner and the Guidewire team, had been phenomenal during this phase.

That's great. And I'm sure you mentioned there -- I'm sure this is a question that many will ask. You mentioned an implementation partner. Would you like to share the implementation partner that you're working with?

Yes. So Gore Mutual work with Deloitte as our implementation partners. Deloitte had -- the project has been divided into multiple releases. The first release went in production in July. We have the second release scheduled in November and third for commercial lines in 2022.

Excellent. Thank you so much. Greg, your organization, your team just has a tremendous amount of Guidewire expertise, internal within your team. Did that help at all do you think through the pandemic? How did the pandemic impact your program?

Yes. Certainly, the pandemic had an impact. But because we had already started and had teams formed at the start of it, it was a pretty natural move to just everybody working from home. We probably had 10% of the team was already remote in some sort of way. So one of the real upsides of the pandemic was frequently those people where there's 1 or 2 people that are remote into a meeting where everybody else is in the conference room, they felt kind of like second-class citizens. And they said it was fantastic, a much better experience. But also, as part of this program, we were building these true enterprise teams. So even people that were attached to an office, frequently, it wasn't the same office. So once again, by moving virtual, those kind of barriers went away. It wasn't 2 conference rooms connecting together. It was a bunch of people on Zoom. And then, in particular, as we started hiring new talent, either in areas of growth or just normal turnover, we've recruited nationally. And so now about 1/3 of our IT workforce is not in a commuting distance to 1 of our offices. And we never would have added staff at that pace away from offices if it weren't for the pandemic. I would say the biggest downside is when you truly need to collaborate in the design of completely new solutions. There's just something about being together and writing on a whiteboard and then going to dinner afterwards and coming back the next day to keep working on the problem that you just can't do that same kind of thing virtually. So we missed that. And then I think long term, we're still concerned about what's it mean for the culture. Does culture change? Do we instill our values and our culture in the same way virtually? Or does it really take getting to know people in-person to build that?

Thanks. Those are great points. I know especially what you mean about that, that feeling of comradery that you want to have in the program. I would obviously much rather be on stage with the 2 of you and in front of a live audience. So those are things that we can all relate to. There's another great question that came in from the audience, and I'll ask this to both of you. Maybe, Greg, to you first. And this is a question from [ Ken Wong ]. He asks, "My interactions suggest that the P&C industry is a very tightknit group. Have you seen an uptick in peers reaching out to you to understand your experience? Are there any consistent themes you've noticed in those conversations or a line of questioning? And perhaps any changes in terms of what their cloud hesitancy might be?"

That's a good question. So I would agree with you, it's a tightknit industry that you probably think. And that's certainly one of the things I miss in this pandemic time is that I would go to industry events, not honestly caring too much about the content of the conference, but it's more about interacting with peers. I think that's part of it is just my personality that I spent 10 years as a consultant, and I just naturally want to know what's going on in the industry and other businesses, but you learn a whole lot in that process as well. So I would say I actually have fewer people asking me about how things are going in the pandemic world because they have to make more active -- email me, try to connect as opposed to, hey, Greg, I haven't seen you in 6 months. How is your implementation going? So there are fewer casual kind of interactions. We definitely get a lot of more formal requests of people wanting to understand why we made certain decisions, how things are going, things like that. One of the things that you guys are probably all curious on that I normally would know but I just don't know because I don't interact with so many people is how many people are slowing projects down because of the pandemic or delaying purchase decisions. We haven't done that, but knowing the culture of many insurance companies, I would think they probably would have slowed down some decisions. I think Gore is probably an exception that decided to double down and move fast. But 1.5 years of the pandemic, man, you can't wait any longer. They got to be -- I mean, that slowed it down, have to be reversing that about now because this is truly the new normal.

Yes. And what you described. So of course, Gore pedal to the metal doubled down and was really looking to use it, actually, is a competitive advantage to leapfrog in the industry. But even from the numbers that Mike had showed earlier in the presentation, we've still seen just a phenomenal push towards cloud. Maybe a little kind of hesitancy as people started to work remotely in things, but we definitely see a significant push to be taking on these programs. So that's definitely been quite heartening and something that we're excited about. Raj, how about you? I know across the Canadian carriers, there tends to be maybe a little bit more sort of conversation now and then. Have you had a lot of questions come your way?

Yes. Yes. Exactly, Christina, because we got formal request of how our experience have been, and many reasons for that. One is a part of our business is strongly regulated, so which means that all the carriers are impacted by that regulatory environment. Second, the customer behavior change, which is happening on the user experience side, and how it has been accelerated due to pandemic and all, that is in everyone's mind. And essentially, what that does is driving more traffic to the online website, comparative website. The scalability and other aspects of the platform suddenly become more critical, and ability of a carrier to enhance its product model, underwriting rules and all is also. We all face common challenges. And essentially, as a success story goes out on implementation, along with how the platforms and all have been stable, generally makes people curious because, as you know, transformation projects are not easy. I mean there are technical decisions, strategic decisions that have short-term and long-term impact on the operational environment. So that curiosity is there, and we are being approached for what we have done over the past [ several years ].

That's great. And obviously, we see a tremendous amount of momentum across the Canadian carriers, which is great. I get the sense that maybe there is almost a bit of sort of fear of missing out, which is great to see that there's so much innovation truly being driven across the Canadian market. And Greg, I promise it sounds like maybe you'd be getting more casual phone calls if I published your cell phone, but I promise I won't do that. All right. Well, so one thing I do want to touch upon -- so of course, as we've talked about a number of times, these programs are really -- they're quite complex. And so we've talked about some of the great things that you've both achieved through the programs, but I know it hasn't been without the complexity and challenge. So maybe, Greg, if you don't mind, I'll start with you. What are some of the challenges or maybe lessons learned that you've taken from the work that the team has done, thus far, in Guidewire Cloud?

Well, a few different lessons learned. I'll start with the ones that we kind of brought on ourselves is that when building this platform of the future, it's not just Guidewire, but it's other components, some coming through Guidewire partnerships, other things we've implemented that are things Guidewire doesn't supply, a couple of things that we've chosen to kind of go our own way and not use Guidewire capabilities. So it's a massive integration effort just getting all of that together and to be a new insurance platform. And then on top of that, we serve very distinct channels that's really at the heart of our acquisition strategy was to buy our way into new markets and expertise there as opposed to just adding capacity. So we -- the traditional American Family brand sells through exclusive agents. We did an acquisition that does the vast majority of their business direct. We've done 2 acquisitions that sell almost exclusively through large partnership relationships. And then we've done one that was technically a merger that -- to get into the independent agent market. So we are doing things in order to support that multi-distribution channel where the experience of the agents of the service reps and, of course, the end customers all have to be different by channel. So that created some complexities. The other challenge that we knew getting into as an early Guidewire customer is, of course, there were some maturity aspects, being one of the first Guidewire Cloud customers. The first is that we started our implementation actually on Guidewire Classic. So it was Guidewire hosting but technically not the Cloud Platform. And then when the Cloud Platform was released, we had to make the decision whether or not we move to the Cloud Platform or stay on the Classic hosting. And we chose to move to the Cloud Platform because we wanted to be on the latest, and we didn't want the pain of doing that move later. So that caused a little disruption during the time we made the move, and there's still a couple of gaps that we're looking to close that we got used to in our old platform, and Guidewire still building out those capabilities. But -- so those have been kind of the -- I guess, the 2 major challenges other than just bringing 5 different organizations together to agree on a common platform. So there's a lot of business challenges as well.

That sounds like a big family meeting of some sort, I guess.

Oh, yes.

And in terms of what you mentioned also around some of the capabilities in GWCP, your organization is so mature in certain areas around development life cycle and things. You've been very patient in terms of what we continue to bring in the road map. So we appreciate your partnership and guidance in a lot of that as well. It's very much appreciated. How about you, Raj, from your standpoint?

So I mean, the overall journey has been very exciting but tons of challenges also during the journey. And flexibility and the team's ability to break the problem into smaller modular problem have been the key. So the approach that we had taken from day 1 is to decouple the challenges independent and build circuit breakers, toggle switches and others, so that the rollout of the platform is gradual. As you would usually have on the Guidewire Cloud native platform, the architecture itself is built in a modular way, but we had -- we were on the Guidewire Cloud Classic platform. So Guidewire provides a service of review -- code reviews and all. So using that service, we made sure that the component that the team had designed would be flexible when we go for Guidewire Cloud native. But essentially, the key has been the flexibility on the business side to find alternatives, so that the problem size is made smaller and then flexibility on the implementation partner side to bring on each integration gradually in the production environment.

That's terrific. And actually, what you were just describing in terms of like some of the code reviews and support that we offer there, that actually coincides really well to another question that was asked by the audience. And this one comes from [ Chris Kelly ]. And so Raj, I'll ask you first. He asks, "How did you weigh the benefits of cloud versus loss of some customization from your on-prem software?" So did you find that any kind of system standardization on cloud was a constraint or a meaningful pushback from the business folks?

Yes. So it's a tough balance, right, because we want to do customization, but the question is that are we doing customization just for the sake of the customization? Or what is the true business value that is being driven? Guidewire, being the standardized platform used across the industry partners, there are multiple ways to do the same business task. And if we do customization a lot, then we lose the ability to seamlessly take the future releases that would come our way. So essentially, the question is that, are we doing something that would be painful in future? Or are we able to adjust the business processes and bring it more closer to the industry standard practices, which is already available in the Guidewire platform most of the time out of the box?

That's great. How about, Greg, from your standpoint that I imagine, as you were mentioning, across your operating units, a few of them had experience with Guidewire. Do you think that they found that they've been constrained in terms of some of the standardization that's part of the cloud solution?

Yes. I don't think we've encountered that. So I understand the nature of the question because like when we moved our HR and financials to Workday through the years, yes, we definitely were moving to more consistent standardized models and not have customizations. And that was an advantage moving to cloud solutions. With Guidewire being on our own instance that's managed by cloud and being a highly flexible architecture, there is not any customization that we wanted to do that we couldn't do. The biggest change is -- and it's a good one, is Guidewire gives much more specificity about how to do the change technically. So some of the customizations we did 8 or 10 years ago, like in retrospect, we never would have done it. It was partly from lack of guidance, partly our lack of maturity in the solution. But there really isn't anything we've been told you just can't do. It's more, okay, if you're going to do that, this is how you should do it in order to be upgrade-safe in the future.

Terrific. That's fantastic to hear. So what -- the next thing that I'd love to touch upon and probably actually wrapping this up, unless we get some more questions from the audience, I'd love to hear sort of what each of you are expecting in terms of what's next for you in your Guidewire Cloud journey. I know there's more releases, but maybe additional business benefits or things that you expect. So Raj, let me start with you.

Yes. I mean one thing I really love about the Guidewire platform is the accelerator ecosystem available to us. So that accelerator ecosystem, one, it speeds up the innovation and delivery of business value to our partners; and second, it opens up to the insurtech research being done all across. So one example that we use is we're implementing the first machine learning fraud detection algorithm, and it interfaces within the Guidewire UI. It uses the Guidewire data along with the other data that the organization has. And through that accelerator, the journey has been pretty fast. If there was any solution which doesn't have such type of ecosystem, then the adoption to newer technology would be slow. So once the core release is in production, we're really excited about all the peripheral benefits that we have now access to that we want to bring over to our ecosystem.

That's great to hear. We love you using our insurtech partners. That's fantastic. Greg, how about you? What's next for Guidewire Cloud?

So for us, we got a long journey ahead of us. So we have our first release with our first operating company in a couple of weeks. And then it's really getting every operating company on the platform for new business across these different channels, getting to all states, migrating our legacy platform to Guidewire and retiring all of those. And given insurance cycles, like even if all the code was done, we'd still be talking a couple of years just to get through renewals and all that. So there's a lot there. We haven't really talked about claims at all. That's probably a little bit more interesting journey because you can move claims so much faster. With claims, our journey was a little bit different because 3 of the operating company already used ClaimCenter. Another one had already selected it but hadn't started implementing it. And another one was really on a diving platform that they needed to get off quickly. So we actually moved all of our companies to ClaimCenter, and that process is complete. We have one of the legacy systems that still needs to be retired, but that's in process. And then we're going to move all of that to cloud likely next year. We have to phase that in given the volume and stuff like that. But for claim, it's going to be a much faster path to be fully on the cloud.

That's great. Thanks. And of course, we look forward to figuring out how to bring in some of the road map releases, right, to take advantage of those and the time lines that you're talking about, too. There is 1 more question that came in. And Greg, I'm going to direct this one to you because I think you'll be the one with the best perspective of this, having been able to compare a self-managed insurance suite now with cloud. And so the question that comes in from [ Austin Boaz ] is, "In your opinion, what are the biggest hurdles for insurers using on-premise InsuranceSuite to adopt InsuranceSuite Cloud? Is there any guidance that you would offer there?"

Yes. I think it certainly varies a lot by carrier, but what I hear from a lot of my peers is that they had to go to their senior executive team or go to the Board and get the justification for the initial implementation. And now moving to cloud is going to be another big investment, and they have to go back to the well for that kind of funding. And if it's a mature, stable implementation, I understand that as opposed to if you're adding new products or market expansion or something and you're doing the work as part of that. So that's a hurdle. The ones that have done significant customization or have not upgraded in Ohio, I hear them saying, well, there's just a lot of work we need to do to get rid of noncompliant customizations or we need to upgrade on a newer version even before we do that. Some of what Guidewire has announced recently has eased some of that. I believe there's an option to move from version 8 directly to cloud now, for example. So I haven't talked to a lot of these people in-person in more than a year. So I'm sure they're relieved to hear that, that kind of tooling will help. But it's really upgrade cycle, investment and amount of customizations that would be the barriers.

Yes. Absolutely. Well -- and as you mentioned, so Cloud Direct is something that we offer now, which allows customers to move from version 8 or version 9 directly into GWCP. And we found definitely a lot of momentum from that, which is terrific. Well, thank you, both, so much for joining today. I apologize that we're not together in-person, so that I can thank you with a dinner afterwards, but really grateful to at least be able to see you 2 virtually. Hope to see you in-person sometime soon. And thank you so much also to the audience for all of the fantastic questions. Very much appreciated. We're actually going to now take a 15-minute break. So thank you all for tuning in, and we will be back in about 15 minutes with the next section. Thanks so much, everyone. Bye-bye.

Thank you. Thank you, Christina. [ Break ]

Hello, and welcome. My name is Diego Devalle, and at Guidewire, I'm responsible for product, engineering and cloud operation. It's an honor for me to be here today and give you an update on the last year. We made tremendous progress transforming the Guidewire platform into a cloud service, providing a new foundation for innovation by both customer and ourselves. Our vision from the beginning was to build a cloud platform optimized for P&C insurance on top of AWS, leverage the InsuranceSuite core to serve as a transactional system of record, componentize and extend that core with cloud-native application and digital service, all included a robust data platform to deliver rich data and analytics capability whenever we need it. I recall 3 years ago, the first meeting I had with all of you here in this building in the cafeteria. Back then, we laid out this plan, a plan in which the first release was upcoming 6 months later called Aspen. And since then, we have been releasing every 6 months, basically executing the plan that we laid down back then, and has been tremendously successful. With the launch of Dobson, we made great progress orchestrating all the different components of the platform. We now have more developer tooling and API that could be leveraged in the new integration framework to quickly create new integration. And those integration build in this new way will be upgrade-free going forward. Those same API can be used as a starting point for our Jutro web application framework to create an array of new digital experience, faster than ever before. InsuranceSuite, InsuranceNow, as well as data platform now run on top of GWCP infrastructure. Going forward, all the progress we made around automation, configuration and observability are enabling us to spend even more time on customer innovation. A couple of years ago, I mentioned that for the engineering team, the cloud transformation was a big opportunity not only to increase the release frequency, but also to accelerate the innovation that we could deliver to our customer. Two years later, I can confidently say it is happening. We continue to strengthen, extend and scale GWCP with every release. So now it is available in regions all over the world. But our scaling is not only limited to region. GWCP continue to mature. Customer confidence and adoption of GWCP continue to grow. And as the number here clearly show, you can see that we went from 1 region to 7 regions around the world. But more interestingly, in the span of 18 to 20 months, we went from 2 customers to 46. This has been tremendously satisfying and rewarding for the entire engineering team. What is also very exciting is that we have reduced the cycle between the engineering team and the customer adoption. This makes the entire workload more exciting for the entire team. When you can build a feature, release it and see immediate adoption that create a feedback loop that it was not exactly possible in the previous world of self-managed release. But while Guidewire InsuranceSuite has been designed from the ground up to support the largest insurance in the world, when we started GWCP, we had the same goal. We must support the concurrent workload of the largest insurance in the world on top of the platform. Company like State Farm and USAA, policies in the tens of millions, transaction in the hundreds of millions and user in the tens of thousands. Our approach to preserve our DNA while at the same time, take full advantage of the cloud transformation opportunity, is what we call hybrid cloud. GWCP hybrid cloud or hybrid tenancy model introduced last year could be summarized in 4 statements, 4 bullets. First, one single tenant IS core per customer. Gradually, that IS core is going to increase the level of componentization. Number three, we are augmenting by multi-tenant cloud service share across multiple customers. In engineering, we call this setup left brain and right brain. And so on top of those brain, we share a common cloud infrastructure, service and developer tooling. Our tenancy strategy is designed to maximize value to our customer. Single tenancy for our core give us data isolation, security and differentiation at the domain level, but also allow our customers to preserve and leverage their multiyear investment in InsuranceSuite while, at the same time, have an opportunity to adopt innovation at their preferred pace. By contrast, for us, hybrid tenancy model enable high degree of cost efficiency as well, thanks to containerized workload and orchestrated by Kubernetes. This approach enable us to balance speed of adoption, performance, operability and cost. And if you look at the adoption today, our approach has been spot on. But GWCP is more than that. Guidewire always set the vision and ambition to transform InsuranceSuite by accessing and leveraging data. The cloud transformation has been critical to transform this vision into reality. We first delivered CDP in Banff release nearly a year ago. From that moment on, we had the capability to stream all the data, all the transaction from our core into what we call a data lake. And later on, with Data Studio releasing Cortina, we enable analytics up easier than ever, allowed quick access to precurated data set but most important, allowed business and IT user to manipulate, create their own data set. This is going to be critical for our customer, but it's going to be critical also for ourselves, because it's going to enable a set of solutions that we could build going in the future. You need to think about CDP as an infrastructure that has a potential to be a game changer. A good analogy could be the introduction of WiFi. When WiFi was introduced at the beginning, it was simple infrastructure. I don't think that most of the people back then had the vision to understand that 20 years later, pretty much everything inside the home is connected to a WiFi network. This is the same. I think that CDP and the availability of every transaction data into a data lake is going to be used by an array of new upcoming application. And to deep dive a little bit more into this, I want to pass the ball to Roger that is going to come here and give you a deep dive on analytics solution that we're working on. Roger, back to you.

Thank you, Diego. The Guidewire data platform is crucial to deliver smart loop analytics to the P&C industry. We've been busy progressing the smart loop since we spoke last year, and we focused on solving business problems. First, we leverage more data. We collect and curate the maximum amount of data that we can. And we also reduced the challenge to use that data. Second, we embed intelligence to power underwriting and claims decisions at the edge, not in the back office. And third, we learn continuously and complete the loop with monitoring and learning, and we help you answer the question, how do I maximize value from our analytic investment? Let's dive deeper. We're helping our customers to solve problems with our analytics in the market right now. Donegal is leveraging Cyence for Small Business data in their pricing and selection models. S&P Global Ratings is extending its Guidewire Cyence partnership to its new cyber credit lending solution that will better inform investors of the creditworthiness of businesses. Aon Reinsurance is collaborating with Guidewire Cyence to help cyber insurers manage their risk capital management and reinsurance placement. Beazley is using Guidewire Cyence to identify risks that they should keep and risk they should not renew to increase profitability. Sompo is leveraging Guidewire Predictive Analytics in their underwriting automation initiative to provide a scoring model to triage incoming risk and increase their quote to bind ratio. Leverage more data to drive granular risk insights. Unlock your InsuranceSuite data through the Guidewire data platform and data studio that helps you access and stream your own data. Incorporate curated external data with Cyence data listening engine. We gather predictive data, including behavioral data, and we turn that into solutions by line of business, including cyber, workers' comp, GL, EPL, and we're expanding lines of business as we go. Reference anonymized peer data to measure your market performance against your peers, and our Compare product, which we'll talk about a little more. We're excited about our acquisition of HazardHub, which complements our Cyence for Small Business casualty offering by putting property or the P in P&C data, and we welcomed 110 new customers to Guidewire. HazardHub helps customers make informed individual decisions. First, starting with scores on relevant perils, including tornado, hail, flood, earthquake, fire and wildfire. But not only do we provide scores, we also provide more than 1,000 variables that contribute up into those scores, including distance to fire hydrant, distance to historic fires, faults, flood, frozen pipe. And you can use this information to micro-segment, to write more profitably and to manage the risk in your portfolio. What we're looking at is an example of the Caldor Fire that continues to burn in South Lake Tahoe and California. The yellow dot is a risk in question. The red dots are fire stations, and that red line is the perimeter of the fire. So as an underwriter who looks at an individual risk, they can understand the context of what's around it. And you can see the individual variables that we collect in this case. And you can see that for wildfire, this location receives an F score, which is the worst score. We can also assess portfolios to answer questions like what percent of my portfolio is more than 1,000 feet from a fire hydrant or what percent of my portfolio is inside or near the footprint of a historic wildfire, and we can get valuable risk insights in seconds through the API. Embed intelligence to sharpen decisions at the edge. This is an example of claims severity with liability property damage. I like to think of this as a Toyota Camry hitting a Bentley, given that we have a $200,000 exposure limit. And as we embed these analytics, it warns us that this individual claim is within the top 10% of claims severity in our portfolio and includes the predictive factors that are underlying that recommendation. Our predictive analytics product is what drove these recommendations, and it allows you to leverage a catalog of prebuilt models and data sets or build your own models and bring those models with you through open source integrations. You can embed insights into PolicyCenter and the ClaimCenter workflows to really bring analytics to the edge, and you can deploy models in days not months. Our customer [ Mika ] uses predictive analytics product to assess claims severity and assign adjusters. Learn continuously to improve outcomes. With our Explore products, you can measure performance against your own internal targets. With our Compare products, you can measure performance against your peers. We compile information daily and allow granular filtering. In this example, we're looking at the claims closure rate. We have a cohort of claims and we're looking to see how many claims are still open after a 6-month period. For our own portfolio, we've closed 72% of those, but our peers have closed 94%. This means there may be increased expense and potential for claims growth. To improve, we can conduct A/B testing to figure out the best approaches to improve our close rate. And we can also monitor our predictive models to detect early drift to understand whether we've selected the right variables and also to consider micro segmentation. Cyberattacks are increasing in both frequency and severity. $20 billion in global cost has come from ransomware in 2020. There's been a 600% increase in cyber crime since COVID began, and 66% of small businesses had a cyberattack in 2019. The average payouts are increasing, with more than $1 million as the average payout for large businesses. Our response to the cyber threat is our Cyence product, which is also an example of the smart loop in action. We start with data listening to capture and curate the information that's most germane to cyber. We then calculate exposure signals to actually answer individual business questions. And then we model that risk at an individual level to generate a technical price. We can then model the entire portfolio of risk and do mass event modeling, so you can understand your aggregate exposure across your entire portfolio. We're excited about the value that we are delivering to customers through all of our solutions into the smart loop, and even more capability is going to be announced in our November Connections event. Diego, back to you.

Thanks, Roger. Indeed, we have a very strong road map ahead. First and foremost, continuing to scale GWCP. On top of that, we want to provide cloud dashboard to increase visibility to operational and business KPI, extending Jutro into a complete web application framework to enable digital agility, introducing a prepackaged insurance LOB under the Guidewire GO brand. All that while continuing delivering out-of-the-box business solution, including usage-based insurance, UBI, or small commercial insurance. Last but not least, we will continue to expand our multi-tenant, cloud-native service. But let me double-click a little bit on that. We talked a little bit about cloud-native service during the presentation. Here, you see some of the cloud services that are a key part of our hybrid tenancy architecture. Some are what we call common cloud service like authentication or access control. Other are more business oriented like rule engine, rating or claim automation service. But today, I want to focus in a new submission OCR service that we will be launching with Dobson. This service enables automated capture and recognition of a court application form for different types of insurance. In Dobson, we now integrated this into PolicyCenter to automate and streamline the submission process. This service highlights how we can leverage the power of the cloud, while at the same time, streamlining the user experience. To see it work, I will run a quick demo. I promise, it's a quick demo, Dragging and dropping in a court form into the PolicyCenter, that will fire -- on the backhand, it's going to fire OCR service to recognize the form information and it's going to trigger automated mapping of the information into PolicyCenter. So with that said, let me actually kick off the demo. Everything starts by drag and dropping in a court form to upload the submission of OCR service. After a few seconds and when ready, the user will be presented with a document review screen. As you can see here, there is on one side the form, and on the other side, you can see that there are some error. For this demo, we have modified those error, make quick change and completed the review. Upon completing the review, all the data, as I said, are automatically mapped and basically ready for submission. And in the next screen, we are back in PolicyCenter, where all the info are automatically translated and made available in our system. This was a quick example. Now Guidewire Cloud accelerate customer efficiency, allow customers to go faster with automation and capacity on demand. Our overall goal is being, from the get-go, build and launch new LOB products faster, expand scale and market reach to change with ease. We really want to have our customer capable to make changes and, in a continuous loop, launch a product, expand our scale, make some changes, push a new version of the product. And all that, while from our side, we're going to continuously and rapidly add more capability to the platform. So this has been the goal and this has been what has been happening in the last couple of years for our early adopter. But while from one side, this accelerate customer efficiency, how about Guidewire efficiency? Last year, we introduced this slide to talk a little bit about our efficiency, to talk a little bit of how the introduction of GWCP will increase our efficiency and will increase our -- the number of customers that we can support by the same amount of people. And so now we are like close to our fourth release. And I can tell you that everything that we're being building is being predominantly focused on efficiency. And everything is panning out. I want to close the presentation with a -- give you a transparency vision on the number of customers that we are now running on GWCP and the acceleration of that. This acceleration will have not been possible without all the efficiency that we introduced in the system and across the last 2 years. As you can see, a year ago, we had 10 customers in development and 1 live. For those 10 customers, we were managing and supporting 99 nonproduction environment. Fast forward 1 year later, this picture has been taken at July 31 at the end of our fiscal year, we are now 46 customers on GWCP and we're managing 220 nonproduction environment, and 6 of them are live. All that has been possible pretty much by the same -- with the same team. My team has been pretty much the same size. And all that has been possible because of all that efficiency that we gain with GWCP. And with that, thank you, and I'm going to wait for questions in the Q&A. Thank you. See you later.

Good afternoon. My name is Jeff Cooper, and I'm the CFO of Guidewire. I joined Guidewire almost 4 years ago, and I am thrilled and honored to lead the finance organization. It is certainly an exciting time here at Guidewire. As you have heard today, we have a huge opportunity in front of us, and we have done a ton of hard work to position ourselves well to capitalize on that opportunity as we execute and deliver on our cloud model. And it's important to reflect on the fact that we are already a cloud-first organization. We have just discussed today how we orient our product development efforts and really, all facets of Guidewire on being cloud-first. When you look at our new sales, you can see that over 80% of our new sales in fiscal '21 came from our cloud products. In Q4, which is always our largest quarter, almost 90% of new sales came from cloud. And we certainly expect this to continue. This shift to the cloud is a significant change in how we engage with customers. And this change offers benefits to the industry, to our customers and to our investors. Most importantly, the cloud enables us to best service this industry. Foundational is that we are changing the relationship we have with our customers by expanding beyond just being a software vendor and building a new division of labor with our customers. We can take on more and allow our customers to focus on what truly differentiates them. As a software vendor, we captured a relatively small piece of the overall pie with respect to the spend that insurers make on core systems. As a cloud vendor, delivering a core system as a service, we can meaningfully expand on this relationship and as a result, expand our overall TAM. As we expand the relationship with our customers, we benefit from occupying very strategic real estate within an insurer's IT framework. Our service is absolutely central to our customers' business operations. It's a responsibility we take very seriously, and we are investing to ensure all our customers achieve successful outcomes. We sell our service in a recurring subscription model and expect to have long-term customer relationships with an attractive customer lifetime value. And finally, as we move to the cloud, we believe scale matters more. It is a very consequential decision to entrust a vendor to not only provide mission-critical software, but to then run that software on their behalf and deliver it as a service. Market leadership and a track record of tackling the largest and most difficult projects will accrue to our benefit as the P&C industry adopts cloud-based core systems. Additionally, within a vertical market, there is an opportunity to build meaningful market share that creates compelling avenues for future monetization. Over the last 20 years, we have earned our reputation as the market leader and we are investing today to solidify that reputation and capitalize on this exciting and large market opportunity in front of us. We are excited to see our business gain momentum as the model starts to play out largely consistent with how we discussed with all of you last year. ARR growth is ticking up a bit. Subscription revenue is accelerating, and we expect this growth to be very durable. Additionally, we will start to see subscription margins expand this year as we start to march towards the long-term targets outlined at last year's Analyst Day. I wanted to take a quick step back to discuss why we are focused on ARR as opposed to our reported revenue. Over the last couple of years, we have focused 100% of internal Guidewire on executing to our ARR targets. We also think about expense ratios as compared with ARR. This is critical to drive the right business outcomes for Guidewire. The adoption of ASC 606, which materially changed the revenue patterns for term license revenue, combined with the increased cloud sales and the resulting ratable revenue recognition, means we have a variety of revenue recognition patterns. While the revenue patterns may vary wildly, the cash collection cycle is very consistent. Generally, our customers pay us annually upfront. But let me walk through the different revenue patterns quickly. For subscription and support revenue, which includes cloud revenue and support revenue attached to self-managed customers, we recognize revenue ratably over the committed term. For cloud, we start the clock on revenue recognition upon provisioning of the software, which for InsuranceSuite Cloud has historically been around 30 days, although we are getting more efficient here. For license revenue, once we have delivered the software, ASC 606 requires us to recognize revenue upfront for the committed term as opposed to recognizing revenue in line with annual invoicing as we did under ASC 605. Given the duration of many term license arrangements, this has resulted in lumpier term license revenue. Our standard term license contracts are 2-year initial terms followed by annual renewals. However, in some instances, we will see deal durations that are longer than our standard terms and it is possible to see shorter deal durations as well. I will also note that a big opportunity in front of us continues to be the opportunity to migrate existing term license customers to our cloud products. This creates additional income statement complexity because in a migration, the customer continues to use their on-premise software for a transition period. As a result, when we sell a cloud deal, some of the software revenue will be recognized to license and some will be allocated to subscription, which can be a bit counterintuitive. Internally, we focus on ARR as a measure that normalizes for all of these different revenue patterns and all the associated complexity. Our definition of ARR largely aligns to annual invoicing activity for our software. The chart on the right-hand side of the page shows ARR growth compared with total software revenue growth. Prior to ASC 606 and the shift in the cloud, our software revenue in a given year was a very good approximation for ARR, and those growth rates were generally aligned. As we have worked through this transition, however, we do expect to see deltas between these measures. In fiscal '19 and '20, reported software revenue growth was higher than ARR as we saw more multiyear term license revenue that benefited reported revenue due to ASC 606. In fiscal '21 and fiscal '22, that multiyear activity that was sold previously creates a headwind to reported revenue. But ARR normalizes for all of this, which is why we continue to emphasize it as the right metric to think about Guidewire, especially when you think about organic growth rates. And when we look at our -- at ARR, our growth is now being driven by our success in the cloud. We are still in the very early stages of this industry shift to cloud-based core systems. But this significant shift is starting to accelerate and will power our ARR growth as we move forward. This next slide drills down into our recent ARR results. Our ability to win and grow in the cloud is critical as we work to continue to penetrate our TAM. While we are in the early stages of the cloud core system demand curve, we are seeing strong momentum with our cloud products. This is a view of our ARR by total cloud ARR and InsuranceSuite Cloud ARR. The chart on the left shows the ARR of all of our cloud products, including Cyence, InsuranceNow, cloud-delivered data products, and InsuranceSuite. And the chart on the right isolates ARR coming from InsuranceSuite Cloud customers only. We are thrilled with this momentum, as this represents an important view into how we think about future growth. Another metric we have discussed during this transition is our fully ramped ARR. Given the strategic and long-term nature of our customer relationships, it's common for large cloud projects to have a multiyear ARR ramp embedded into the customer agreement. As a result, our reported ARR from a new cloud customer is often significantly larger in year 5 than in year 1. As of the end of our fiscal year, we had over $690 million in fully ramped ARR. The chart on the lower right-hand side of the page is a visualization of all of our InsuranceSuite Cloud wins aggregated into a single cohort to give you a view into the average ramp schedule and what that ramp looks like. As we add new cloud customers and layer on new cohorts, we expect this to create a tailwind to future ARR growth, and this will help with overall visibility into ARR. I wanted to repeat this next slide that Diego previously presented because it is very important. We have been investing on the product to drive longer-term cloud operations efficiencies. The ski slope releases on top of Guidewire Cloud platform are creating a more efficient cloud-native offering. We believe our platform is uniquely positioned to meet the needs of the industry, and we have started the work to bring customers to Guidewire Cloud platform as Diego highlighted. Last year, we noted that as we exit fiscal '21, we expect to require less headcount adds going forward, and that will allow for some gross margin expansion in fiscal '22 and beyond. We are, in fact, seeing this play out and the investments in the product to support this profitable growth has been and will continue to be a key part of our approach, and we are seeing that in our subscription gross margin starting in fiscal '22. Now I would like to turn to our long-term model framework. This slide shows some key metrics as of the end of fiscal '21 and fiscal '22 per the midpoint of the outlook provided on our Q4 earnings call. We then show what the business could look like at $1 billion of ARR and $1.5 billion of ARR. At $1 billion, we expect over 75% of our ARR to come from our cloud products. Given our results in fiscal 2021, we do feel confident providing a bit more precision on when we expect to cross $1 billion in ARR. We expect to achieve that milestone in fiscal 2025. This is a bit earlier than our model assumed last year. Our execution gives us increased confidence in our long-term targets as we start to see the market evolve in line with our expectations and as product investments translate into operating efficiencies for Guidewire. As a result, we have not made any changes to our long-term margin targets. The near-term targets have been updated a bit with minor changes to our gross margin. We have adjusted the midpoint of the range down by 1 percentage point, and this is a result of us getting to $1 billion in ARR a bit earlier than our prior expectations. In fiscal '25 and '26, we expect to see meaningful scaling benefits and the margin target in fiscal '25 is just a step along the way. And we would expect to see meaningful expansion in fiscal '26 as this model continues to play out. Overall, we are pleased that our model continues to evolve consistent with the expectations that we laid out last year. My next 2 slides will expand a bit on the margin expansion opportunity in front of us. First, let me touch on our progression towards our near-term subscription gross margin targets, which meaningfully drive our overall subscription and support gross margins. This slide looks at the progression on a gross margin basis and on a gross profit basis. Obviously, a key part of the story is our durable subscription revenue growth that we expect to maintain. Then as we look at the cost, you can see here that today, the majority of our cost to support our cloud business are headcount-driven. This is a function of our investments in cloud operations to support our early cloud customers. We feel confident in our product investments to allow for a much more scalable, post-production run time efficiency that will allow us to taper these investments significantly. As you look to the out years, non-headcount costs will continue to grow as we add cloud customers, but we do not expect to grow headcount costs nearly as fast. As a result, by fiscal '25, headcount costs and non-headcount costs will be closer to 50-50 versus where they are today, which is predominantly dominated by headcount costs. Interesting -- it's interesting, if you look back at fiscal 2019, our margins were higher due to the fact that most of our cloud revenue at that point was from InsuranceNow and Cyence, and we were just starting our investment cycle to prepare for the InsuranceSuite Cloud opportunity. This next slide looks at our investments in operating expenses to support our business and to continue our market leadership. And by operating expenses, we mean our investments in sales and marketing, research and development and G&A. Internally, we look at how we are investing here and compare that growth in spend to our overall ARR growth. We have continued through this recent investment period to grow ARR faster than operating expenses, but that spread has narrowed. As we look ahead, we do expect to bring our investments in operating expenses back to more normalized levels and feel that market tailwinds once we see this industry start to adopt cloud-based core systems scale, will allow for sustainable long-term ARR growth. These dynamics will drive margin expansion and is how we have thought through our midterm targets. So I hope this is helpful commentary to provide some insights into how we at Guidewire see the model playing out. And finally, I wanted to finish on this slide, which I already discussed at the start of my presentation. But we feel very good about the momentum we are seeing at the moment. It is the result of years of hard work to put us in this position. We are eager to keep this momentum going as we execute towards our model targets. Finally, there is GAAP to non-GAAP reconciliations in the appendix, and these slides should be available on our website by the end of the day today. So with that, I thank you all so much for participating in our Analyst Day, and we'll here quickly move to Q&A. Thanks so much.

All right. Great. Thanks, Jeff and team. We'll now move to the Q&A portion of the day. [Operator Instructions]

And Alex, while we're gathering, we were going -- unmuting the conference room. I'm assuming the audio sounds okay coming from the conference room. Okay. Good.

Okay, good. Well, our first question is not live, but I'll read it. It's for Tyler Radke at Citigroup. Historically, application companies have struggled to see meaningful adoption of native analytics solutions such as Workday or Salesforce. What gives you the confidence that perhaps it's different for Guidewire versus other application peers?

I'll take a shot, and then I'll hand it over to Roger to give his perspective. I think the insurance situation is pretty unique. And I was trying to explain this a bit in the diagram that I put up there about how connected core business systems and processes are to the analytics challenge. And so the way I think about it is that data needs to be sort of structured in such a way as it can be analyzed and extracted. And then the model, the prediction needs to be pushed back into that system in order for it to provide benefit to underwriters, claims adjusters, routing, you heard lots of use cases. That, for us to be able to deliver a complete system, a complete sort of smart loop that enables that process to be sort of easily implemented by an insurance company, I think will cause the adoption of that approach to increase. And I think I want to be kind of clear here. I don't think of it as Guidewire replacing 100% of the analytics that exists at an insurance company. That is not the idea. The idea is that we will augment every business process that's running on our core platform with analytics and with external data. We'll improve those processes with those -- these techniques. And so from that perspective, my perspective is we will see more and more adoption of these solutions in our customer base. So that's my take, and I'd love to give Roger a chance to give his perspective.

Yes. Thanks, Mike. I absolutely agree. I think the statistic that Mike showed earlier that approximately 50% of our FY '21 deals included at least one data analytics product is a testament to that. And it's a really exciting time for us, not only we're deepening relationships we have with existing customers, we're actually selling more analytics to existing customers. And ultimately, I think analytics multiply the value of a customers' investment inside of our core software.

Okay. Great. And then we just have a follow-up from Tyler. He says how have your assumptions changed now versus a year ago in terms of the contribution of Tier 1 insurers versus Tier 2 and 4 in the medium and long-term ARR targets?

Change, it's a good question in terms of change. I'm trying to think about -- I would -- at a high level, I would say they haven't. I think we obviously look at the actual deals that we've closed and how those segment across the tiers. But I've been very happy with the uptake on cloud, both migration and net new sales across segment. And that bears out in terms of the actual deals that we closed and announced. But it also -- that confidence, I would say, across tiers is also based on the pipeline that we see and the quality of the engagement that we are seeing with customers who are doing these valuations. And so certainly, there's going to be a distribution of the tiers as it rolls into the actual cloud ARR and total ARR of the company. But in terms of our sort of confidence in the long-term outcome of this and moving all of our customers to cloud eventually, that hasn't really changed.

Yes. No, I agree. I mean as we thought about how we modeled this business, I think one of the key takeaways from this year is it played out largely in line with our expectations, which was very good to see. We always are looking at some of these Tier 1s and when they might eventually go cloud. We weren't necessarily expecting any of those events this year. As we think about the fiscal '25 target, certainly, we would expect a small number of those to move in a more meaningful way.

Okay. Great. I know Ken Wong wants to ask questions, [ Aurora ], can you bring him up? We're promoting Ken to panelist currently. Ken, if you can accept and unmute your cam and mic and join us.

Can you guys hear me okay?

Yes, we can.

Okay. Great. So this first question, I guess it could go to Diego or Jeff, but you guys touched on how you guys are driving more efficiencies with GWCP. I think, Diego, you highlighted how there was 10 going to 46, I think, customers on GWCP. Any rough sense how the headcount relative to those 10 and 46 looked a year ago and today? And I think, Jeff, you already somewhat commented on headcount going forward. But to the extent you guys can maybe quantify that a little bit, that would be fantastic.

Sure. You want to take the first pass, Jeff?

Sure. I'll start and then, Diego, I'm sure you'll have plenty to add. I think one of the key takeaways is we used to -- going back 12 months, 18 months ago, we used to think about the business in a way of, hey, we have a cloud customer that we're going to add, how many headcount do we need to support that customer? We no longer think about it that way, right? So we now have a cloud operations team that has delivered, that has pods. Those pods have capacity to handle certain amounts of customers. And so it's no longer an input in how I model the business, thinking about, okay, how many headcounts do I need to add to support this number of cloud customers. Our perspective is that we've invested a lot. And we've talked a bit about how we probably invested a little bit more than we needed to earlier than we needed to just to make sure that we have the team in place to handle these early cloud cohorts. But we don't really think about it that way anymore. I think that the investment we've made, we expect that we can leverage quite significantly as we look to adding customers over the next 12 to 18 months. Diego, feel free to add to that.

Yes. I'll add a couple of things, right? There is always an aspect that is the aspect of the 24/7 coverage. And so that was part of the initial investment. You need to have people around the world to cover for customer and for issue. And that for, at the beginning, we invested in a way that give us that coverage. And of course, that coverage with little number of customer was like disproportionate. By the time you get more customers, you start to get some efficiency. But from a technical perspective, at the platform level, what is super, super interesting for us is that we moved from a world into which the infrastructure of every customer was kind of dedicated to a world into which at the platform level, the infrastructure is coming across all the customers. So that is the biggest change that we've been able to sort of evolve during this year. You can think about the sort of situation into which you upgrade, let's say, the Google Gmail infrastructure, and all the users that are in a specific cluster get the latest version of the platform at the same time, moving from a world into which there was like a dedicated instance of that Gmail example for customer A, customer B and customer C. So to be specific on your question, at the engineering level, we sized the team for the platform. A couple of years ago, we set our plan, and we didn't move much. I mean, so we didn't see much difference of what we've originally planned.

Got it. And how automated is that move to the new iteration from Aspen to Banff to Cortina to Dobson? Is that customer dependent? Or as you guys release, you get -- they get -- you guys all get the benefits of the efficiency.

Yes. So it's a combination of 2 things. First of all, contractually with the customer, we go through an approval process and approval stage to make sure that they are all on the same page, and we're going to move them forward and so on. But just, for example, given a sense from Aspen, moving from Aspen compared to moving from Cortina to Dobson, we have improved like 50% improvement from a time line perspective, right? So there is an aspect of approval that Christina kind of manage all those aspects with the negotiation and alignment with the customer. But then there is an efficiency from our side. So I think we went, give or take, 2x, and it's just the beginning. There is a lot of things that we're doing in our infrastructure to enable us to do that move even more efficiently.

Got it. And if I could sneak in just one more. Mike, Jeff, either of you guys, it might make sense. But as you think about the medium to long term, I guess anything from a trend perspective or just how you think about that customer conversion pipeline that would suggest maybe the CAGR might decel from the mid-teens that we're seeing from this past year to fiscal '25?

Well, we feel good about the guidance. We feel good about the update to the midterm plan that we provided here. Everything that we're seeing, the quality of the discussions, the way that the system is being adopted by the customers that have already purchased and we're already partnering with gives us confidence. So I think the simple answer is no. We feel good about the guidance and the guide. And if I could add one more thing, Ken, just in terms of helping you understand where we are with respect to the question you asked Diego, the most important thing we've established is the learning cycle, right? The learning cycle at Guidewire and with our customers and with our cloud customers is instantiated now. And that automatically just makes us more efficient, a little bit better, a little bit more efficient, a little bit better. It helps us sell. And so that factors into why I think we're confident about the future.

And the one thing I wanted to add, Ken, is the FY '25 target is not $1 billion. That's when we cross the $1 billion threshold, right? And so as you think about CAGRs, it's important to keep that in mind. We've obviously given guidance to fiscal '22. Last year, we noted that we felt very good about getting back to the mid- to upper teens, that it would take a couple of years to get there. And that's still very much where we are at. And so that's how we're thinking about the CAGR for both the midterm and then even really the longer-term targets.

Our next question is going to come from Jackson Ader.

All right. Great. So first one is for you, Mike. There weren't -- the Tier 1 activity in terms of new deal signings in the cloud in fiscal '21 wasn't what we've seen in the past. And I'm just curious what happens when a Tier 1 insurer that is a Guidewire on-premise customer is looking to migrate to the cloud. Today, say, you know what, we're going to do this, and we're going to go in RFP and we're going to do -- go out and source as many vendors as we possibly can. What does that process actually look like when a Tier 1 insurer decides to move to the cloud?

I would say -- I'll give you my perspective of how it goes in a perfect kind of sense, is we're constantly communicating with these customers about where we are, where we are on the product road map, where we are on the capabilities, where we are with our existing customers, the degree to which those customers can engage with us on live hands-on proof-of-concept about how the system works, how the platform works. That is what I mean when I say that the confidence level here increases because then we start to get real tangible feedback from them about why does the system work this way, why does the system work that way, is this on the road map, is that on the road map. We work with them to define our road map for our follow-on releases. And as we build the confidence in that innovation cycle, we can start to have a lot more confidence about saying, "Hey, this list of things that you've described as must-have requirements, we feel very good about that being in release x, release y." That ends up being aligned with their program priorities. And so the other thing you should be very aware of is that these implementations at our customers are in a state of change at all times, right? They've got initiatives. Hey, we're rolling out this new line of business. We're rolling out these other states, we're adding this functionality to the on-prem, self-managed instance of Guidewire. We want to get those things done before we make the decision to move to cloud. That is not a sort of external evaluation if that's what you were hinting at. That is a discussion with Guidewire about when and when it makes sense to make that move. So that's, I would say, actually the pattern that is going on with all of our Tier 1 customers.

Great. All right. Awesome. And then a quick follow-up for Jeff or I guess for you, Mike, it doesn't matter. The medium-term and long-term financial targets last year, I didn't necessarily get the sense that there were actual time lines associated with the mid and long term. And so to hear that FY '25 is kind of a concrete medium-term target. I'm just curious relative to your internal expectations or your previous expectations, how much was this brought forward? And then the implication here is that ARR growth should accelerate. And I'm just curious what years you expect to see the biggest acceleration. Should it be a hockey stick? Or what does that kind of look like between now and then?

Let me take it quickly, and then I'll let Jeff jump in because he really lives the detail here. But there absolutely is a time line associated with this. I mean as you stretch out into the future, you introduce risk. And so there's -- we have to be careful about sort of ascribing a certain time line to this. But I can't -- what I try to continue to repeat is that this is going according to plan. It's even slightly ahead of plan. Both on the how much of this can we sell, and is it really working, and are we really making customers happy with it, and are we then delivering the efficiencies we need in order to deliver the margin. That's right, that is going according to plan. And so last year to this year, I'd say we're right on track to ahead of schedule, and Jeff can give you a perspective about sort of the other sort of characteristics of your question. But my general take is we had a good 5-year plan. We executed on it very well last year, and so that's what gives us the confidence to give you a little bit more specificity about when we'll get to that medium-term target.

Yes. And I think what -- this has largely played out, again, as I said before, in line with how we had expected when we put that framework in place last year. Our intention there was to help folks understand what this business would look like at certain milestones, understanding that this is a business that moves at its own pace. This is an industry that moves at its own pace, and it can be sometimes difficult to nail down specific time lines. Our intent when we put that framework in place a year ago was, hopefully, a year later, we would -- things would play out, and we'd have a bit more data that would give us that confidence to then put a marker out there, which we did. And if you go back and compare to the model we had a year ago, it pulled it forward a little bit, right? I mean, a year ago, we were at the cusp. Would we hit $1 billion in '25 or would it fall in '26? And it was -- I think there was -- if I had a probability weighted, we felt like it was certainly a possible ability to get it in FY '25. But we weren't necessarily ready to put that number out there. And this year, that model was much clearer for us. So it did pull forward the revenue. And then that did have a little bit of an impact on the margins because it's such a critical point in the scaling of the company, that as we start to add those cloud customers, leverage the investments we've made in Guidewire Cloud Platform and realize the margin improvements as we build that scale, it's such a critical part of that overall, how the model will play out.

And then the kind of growth acceleration implied there, what should we be expecting in the next couple of years?

Yes. I mean it's very consistent with how we talked about it before. We -- last year, we said we expect to get back into the mid- to upper teens. It's going to take us a couple of years to get there, and that has continued to [indiscernible] at this point of time.

Thanks, Jackson. Our next question comes from Dylan Becker at William Blair.

I appreciate all the color today. And I know like initially, I think we started talking about the value of the content and kind of the underlying infrastructure to GWCP. So maybe I wanted to dig in around the importance, maybe some partnerships, some integrations to help kind of fuel that content engine as you're building out that infrastructure layer. How does this help scale kind of certain segments, maybe allowed you to be more competitive in certain areas as well and driving kind of that value and ease of use for your customer base?

Yes, it's a great question. And I think one of the things we learned over the past -- over the course of the past couple of years is how important integration flexibility and repeatability really is to the overall expense of running Guidewire. And it's actually caused us to pivot some of the product investment. You'll see us GA an integration framework and an eventing model that's in the core of InsuranceSuite here in an upcoming release. And we're very excited about that, just because it's going to unlock a much more -- a much easier and cheaper way to integrate to Guidewire Cloud for insurtech and for applications that are external to Guidewire. You see that in the growth rate on the applications that are described on the marketplace. I think it was -- Raj described it as accelerators that they're looking forward to take advantage of. We see it with 2 really popular -- or 2 popular companies. And one very popular use case is fraud, in detecting fraud. And there's 2 great partners in our ecosystem, one's shift and one's risk. And I think risk was actually mentioned in one of the answers on the Q&A today. The use cases here abound. And I think as we're able to deliver an integration framework that's cheaper and easier to use, you're going to just see more and more adoption of this going forward. So I don't know, Christina, you own this area of the business. I wanted to give you a chance to speak on it if you have any other thoughts.

Sure. Thanks. So building on what Mike said, we have continued to do more and more, not only to make a variety of different solutions available through marketplace. But we've also made an investment in the past year in some fixed fee integrations and things that are very easily deployable and repeatable for customers. And intriguingly, those aren't the ones that you think of with sort of the exciting and unique use cases. They're the ones that are probably some of the most just kind of straightforward in terms of being able to do vehicle lookups, certain supplier fulfillment and whatnot in the claims space. And so we think that, that's a really good balance, right? In marketplace, we provide not only the opportunity to do more of the cutting-edge and more innovative things, but also to be able to hopefully take some of the burden off of just some of the more basic and core integrations that our customers need to be able to do. We want to be certain to be able to satisfy both sides of that going forward.

Awesome. That's super helpful. Maybe one more for Jeff as well. As we think about the dynamics with kind of ARR, fully ramped ARR, that acceleration, migrations versus new. Obviously, a lot of components to kind of digest here. Is there an easy way to -- or how should we be thinking about the contribution from kind of prior year ramps layering into maybe the current kind of ARR guide? How that layers in over the coming years? And then as you sell more of these kind of cloud -- or these migration opportunities, is there a point where the ramp structure becomes less steep, right? As you guys have kind of standardized across this product and maybe where that comes in and becomes less of a factor over time.

Yes. So in terms of helping people understand how fully ramped ARR will then translate into the ARR number, we did give a little bit of a chart to help folks understand what a typical ramp looks like. Some of the disclosures that we provided in the past is that in fiscal '21, we expected around 50% of our gross new ARR to come from ramp activity and the other 50% to come from new sales activity. We're always refreshing the stuff that flows into ARR by selling new deals with ramps that kind of -- and we've said that as we look ahead, the impact of the ramps, we would expect to see that tick up a little bit. So maybe a little bit more than 50% of gross new ARR. At some point in time, that will normalize. On your second question, the ramps decreasing, that is not something we model or considered at this point. It's certainly possible. As we move through the migrations, we have different ramp assumptions for different types of deals. And migration arrangements, because the way we think about a ramp is it's the incremental ARR that's being delivered, and the existing ARR that they already have is more captured in renewal or what's already in the number. And so the additional ARR that gets added to Guidewire, it appears to have -- the way the math works is it's a pretty steep ramp. So as we work through migrations and become and see more of our deal activity being new modernizations that may minimize some of the impacts over time. But in general, I think the cleanest way to think about it is, is that we have not made any assumptions that our overall ramp schedules will change, that we're close to 50-50 today in terms of what's coming from ramped activity, what's coming from new sales activity. And I would expect the ramped contribution to grow a little bit. But I don't expect it to get to 60% or 70%.

Our next question comes from Michael Turrin at Wells Fargo.

Appreciate the time and the information as always. I guess just one for Jeff. And it sounds like you're kind of hitting on it throughout some of the questions, too. But if I just take the $1 billion simply on ARR and look at the CAGRs of what's implied in those 2 numbers, they look pretty tight on one another. I know if we look back historically a couple of years or even if we look at the fiscal '22 guide, the ARR growth number is meaningfully ahead. And so should we think about the shape of this as such that the revenue can effectively outpace ARR in the out years as we get closer to the midterm model? Or maybe you can just help unpack those dynamics. And if it is just the ARR is growing faster than the $1 billion, that's helpful.

Yes. So first of all, as I said previously, the $1 billion is not the target in fiscal '25. That is when we cross that threshold. So you should consider that when you think about building your models and kind of -- but the other topic that you touched on that I think is important, and I touched on this in my slides, of how software revenue growth compares to ARR growth. And we saw a couple of years, as we transition into ASC 606, where there was an impact of multiyear activity that was beneficial to software revenue and software revenue growth rates, then that has created what we're seeing now more of a headwind. So software revenue is below overall ARR growth. I do expect, as we modeled this out, for software revenue to kind of reaccelerate even potentially go above ARR. And then over the longer term, as the model becomes more stable, those 2 will normalize in a much more elegant way. So I do expect to see that phenomenon occur as you start modeling the out years.

I'll take a minute to read a couple that aren't live here. Rachel Freeman at BTIG, working with Matt VanVliet asked, how much impact is the Guidewire Marketplace having on the model today? Do you see this becoming a meaningful revenue margin contributor over time?

The strategy with the marketplace is not to generate revenue directly. It's much, much more about providing value to our customers through the overall platform. I look at it as a mechanism to enhance the sort of model that a customer builds to justify the investment in Guidewire as a platform and Guidewire as a cloud service. And so monetizing it directly is not in any way factored into the plan in any meaningful way. I think we've gotten these questions before. And certainly, there's other technology vendors who do monetize their marketplace. I think that, that potential exists in our future -- that possibility, I guess, exists for us. But at this time, we're just completely focused on filling that marketplace up with as many great applications, great integrations, innovative sort of solutions as we possibly can just because I think it significantly enhances the value of the underlying platform and helps us sell more.

And then Parker Lane asked that if the 78% of GDP that we don't touch today, if half of that is on mainframes and COVID and work from home hasn't been enough to bring them over to the cloud -- or Guidewire Cloud, what will be the catalyst?

I think there's a couple of catalysts that aren't really acute but really are chronic, but they're inevitable. I think that the first is, you could call it digital transformation, but it is your ability to instantiate a digital interface that enables you to connect to customers and agents more effectively. And I wanted to touch on something that Raj said in the Q&A. I made a note of it because I thought it was quite interesting is, I think sometimes people think about a digital implementation, a web interface to your insurance company as a project. And you build it and then you roll it out and then you're successful. But then what Raj said, which I thought was really interesting was well, the very next step is to measure how it's doing, is to measure what people are clicking on and what quotes are people really creating, and where are they getting through the process and how much are you really converting from that interface. And executing on all the changes necessary to continue to enhance that experience requires agility in the core system. It requires an innovative organization that is running that core system to be adapting to what you're seeing through that digital interface. And so I think those kinds of things really are just much, much more possible on a cloud platform like Guidewire. So that's number one. Number two is making better decisions with analytics. Using analytics and using data and injecting those more informed recommendations back to the end users that are using your system. Those things are going to drive insurance companies to realize that modernizing is necessary. And I do think -- we've talked about this before. I think when you have an industry like this go through a pretty significant change from this pattern of we've got a proven deployable, self-managed or on-prem implementation to, wait a minute, the whole industry is shifting to cloud service. That does cause one to say, well, let's wait and see how that plays out. I think as we see the cloud solutions from Guidewire and others start to be more proven that you will see those legacy transformations, those modernizations of the core systems come back to market. That's my take, and those are the drivers.

I would add a kind of note to what Mike just said is, I think technology advancement aside, I think we'll all be facing in the next couple of years, the practical reality of the last COBOL programmer retiring. And there will be a day that there will be no more people who know how to maintain these mainframe systems. So there is a more practical matter that need to be applied to exit from those archaic, old systems.

Okay. Great. And then we'll ask one more question from the chat. Brad Sills at Bank of America asked that with ramped ARR mix increasing in the next 1 to 2 years...

I think we actually got Brad live.

Do we?

Brad, are you there. Sorry to interrupt you, Alex.

That's fine. I'm sure he'd like to speak for him himself.

He's stuck in the Internet somewhere. Sorry about that. I guess he's not there. Please proceed, sorry.

As I was saying, with the ramped ARR mix increasing in the coming 1 to 2 years, how should we think about ARR growth acceleration? Could this return to the 20% to 25% growth level that term license growth was prior to the cloud transition?

Yes. I think we've touched on this a bunch in the past. There are certainly -- and we've modeled the business in a variety of different ways. There are certainly scenarios and how we think through this opportunity and how this opportunity might play out where we could return to those levels. I think to get to that, with organic product sets and thinking through the opportunity the way we thought through it historically, you would have to see a much more condensed migration period. So a wave of large insurers realizing that this is the right time to go cloud. I don't want to wait. I don't want to kick the can down the road any further. And so if you start to see those types of activities compress, that could certainly get us back into the 20% range. That is not how we modeled it, but those opportunities are out there for sure.

Okay. Great. And I think Jackson Ader wants to ask another question live. Can you bring him back up, Roo?

Yes. Promoting him now.

Just a quick question on the TAM slide and just the opportunity for data analytics. We think about the core having, I think it was $13 billion or so, $3 billion from existing, another $10 billion in new customers, and then an $8 billion opportunity in data analytics. So if I just think about $13 and $8, call it $0.75 or so for $1 spent on the core and then $0.75 coming from like data and analytics, is that kind of currently what you're seeing from customers that have adopted, whether it's in the cloud or not, InsuranceSuite and also your full product set in data and analytics? Is that accurate, that kind of $1.75?

That's not the way that the model was built. I understand your question. And I suppose in a perfect scenario, we could establish a pattern like that, that would enable us to build the model bottoms up the way you described. The way that, that $8 is established is really looking at the products that we have and the potential for us to sell it across the customer base. But it's not based on an example of a customer that's already running that way. And it's also -- I think we need to be a little bit more careful about estimating that. I think that's the one part of the TAM, where I think honestly, depending on how much efficiency you can deliver to an insurance company through analytics and automation, that number could be even bigger, right? Because then you're really enabling them to have meaningful impacts on the costs of operating their company. And so the value of those kinds of solutions is pretty significant. So there's a lot of -- I think the intention there is to just say that there's a lot of potential in the product suite that we have sold into our base, but it's not really a bottoms-up replicate this customer times 450.

I know Matt VanVliet had a question. I'll read it. He said, you've talked about 2 to 3x lift in pricing for cloud. And what would cause something to be closer to 3x versus 2x? And how has that been averaging?

So I think that the variability in that depends a bit about what their -- what -- how they're using, what they're using from Guidewire right now, when they bought, how many years have they been running Guidewire, sort of how long the relationship lasts. What's the size of the company. It was interesting you were listening to you were listening to Greg talk about AmFam and the journey that they were on and how, not just the sort of core system implementation that Guidewire was going on, but there was also some significant inorganic growth that was going on at AmFam. And so factors like that all play into this, and we negotiate the best situation that we can. I think there's also different circumstances at different companies about the costs that they're currently incurring with running Guidewire and how much value there is in transferring that over to our cloud platform. And so all of those things factor in to the conversation about the ultimate price, and that's what drives that ratio.

And then I think Ken Wong wants to ask a question again live. Nope? Anybody else in the panel, Roo?

It just takes a second for me to find them out of the participants and promote them. Ken, are you with us?

I wasn't actually intending to ask a question, but you guys brought me back on. So I won't waste an opportunity in front of the dozen Guidewire executives. This one again for you, Jeff. As you guys ticked down the gross margin number, I just wanted to make sure we understood fully what -- kind of what caused that. I would think that if you got to that $1 billion plus, you guys would still see comparable gross margins. Is it just that you guys are earlier in that whole GWCP migration process? Or what causes that?

Yes. Yes. It's a bunch -- as we've gotten there a little bit earlier. It's also how the revenue gets recognized, right? So the margin targets are very revenue driven, and so that plays into it. And just to kind of the extra year to leverage the investments that we've been made. And so when we looked at the model last year -- and I saw someone else had a question and the comments around making sure this is clear that as we looked at the model last year, we did not -- our internal model was close, but not quite to $1 billion in fiscal '25. And so then when we look to the fiscal '26 number, we benefited from a year of more margin expansion. And as we pulled that into fiscal '25, that put a little bit of compression on the overall margin target. It's really the -- I mean the key takeaway -- and I don't want to -- that small move to cause complexity in the message. The key takeaway is this is playing out very consistent with how we thought it would be. We are seeing $1 billion a little bit earlier than what we were expecting last year. As a result, the kind of -- as we are setting that is our proxy for when we get to a certain step along the way, we thought it was prudent to give you our best view, which is a small tick downward on the gross margin side and then continue to signal that we feel very confident in the long-term targets that we set.

Great. I think that's a wrap. I think we've answered all the questions. Is that right, Roo?

About one more from Chris Kelly. Do you see it, Alex?

I don't see it, but...

I'll answer it because it's a good question, and I want to answer it.

Yes, go ahead.

Chris asks, what trends are you seeing with cloud customers moving from single products to the suite? And does cloud migration catalyze suite selling? And I think the answer is absolutely yes. And it was one of the things that we highlighted in the Q4 call about one of the patterns that we're seeing and very happy about, which is that just the process of getting engaged with an insurance company to really talk about their needs, their core system, moving into the cloud, it gives us an opportunity to take a shot at asking about what's the rest of the landscape look like. And to the extent that we can prove that this is a viable platform and that there is a significant benefit in running a consistent platform across claims, policy and billing, it gives us an opportunity to sort of take that whole suite. And AAA in Southern California is a great example of where that dynamic played out. It's a great partnership for a long time with Guidewire, and we were able to use the sort of cycle that we established in order to expand the footprint there. And so yes, that's what we're seeing. And just like any, I think, enterprise software company in the world, opportunities to engage and opportunities to really assess where we can provide value and what the overall strategy is for a company, it plays to our benefit and helps us make a convincing case that we can do more for our customers. And so yes, I appreciate the question because it is a pattern that we're seeing that we're pretty excited about.

All right. Well, that's it.

Okay, there you go, Alex. Back to you.

That's great. Well, practically right on the money, as I predicted in the beginning. So I want to trip it to you. Any closing remarks from you, Mike or Jeff?

No, I'll just say, I appreciate everybody sticking around. It's always fun when you do these Zoom calls to see how many people are on the call. And I do really appreciate everybody spending the time with us and hearing our story. We're incredibly excited about the transformation that's going on here at Guidewire and the progress that we've made. And we like -- just determined and steady progress is the way that I think about it. And it's going really, really well. So anything to add, Jeff?

No. Yes, we appreciate everybody joining us. So thank you so much.

Next year, we'll be in person. How about that? Okay, can we end on that?

All right. Thank you all.